At my law office in the Kanata-Stittsville area of Ottawa, Ontario, I recently met with Mildred and her daughter, Theresa (not their real names). Mildred is a long-time client of mine and we had talked about her estate planning several times over the years. Theresa, who lives on the west coast, was visiting her mother who was celebrating her 80th birthday. Mildred’s other daughter, Karen, lives in Florida.
Mildred admitted that she had fallen a few times recently. Although she was currently living on her own, Mildred knew that before too long she’d have to consider moving to a long term care facility. Because she was worried about qualifying for long term care, she thought she should transfer her property to one or both of her daughters or add one or both as co-owners. Like many seniors, Mildred thought that if she sold her condo to move to a long term care facility, having all that money from the sale would mean she couldn’t qualify for long-term care in Ontario.
I explained to Mildred and Theresa that qualifying for long term care in Ontario does not depend on what you own but on what you earn. When reviewing applications for long term care, the local Community Care Access Centre (‘CCAC’) considers your income such as OAS, CPP, earnings from investments, bond interest, etc. Of course, for any application, they also look at care needs and what spaces are available at the level of care needed.
I urged Mildred not to transfer the property or any of her other assets to her daughters as it wasn’t necessary and would likely create more problems than it solves.
While the condo is her principal residence, the condo is capital gains tax exempt. If she added Theresa as a co-owner, capital gains tax would likely be payable on a future sale. If Theresa didn’t pay her mother fair market value for her share (or all of it), there could be double taxation.
If Mildred added her daughter, Karen, as a co-owner, Mildred could open up a whole other can of worms due to Karen being a resident of the US. For example, on a sale by a non-resident, a portion of sale proceeds must be held back until CRA grants the appropriate clearances. Karen would also need to consider potential tax problems in the US.
Tax problems can be avoided by not doing a property transfer and keeping the condo in Mildred’s name until she is ready to sell it or she passes away.
Both Mildred and Theresa looked visibly relieved. They now understood that a property transfer was not the solution and they had some answers concerning Mildred’s future care needs. If you have some of the same questions or concerns Mildred did, make an appointment to meet with one of our lawyers today. We can be reached at 613-836-9915 or by email at [email protected].
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.
